Generative AI drives demand for enhanced 5G connectivity

Generative AI applications are emerging as a key area of interest in differentiated connectivity, guaranteeing uninterrupted high-end connectivity when users need it most, among 5G smartphone users globally, according to new research from Ericsson ConsumerLab.

The number of smartphone owners using generative AI apps on at least a weekly basis is expected to increase 2.5-fold in the next five years. This rapidly growing category joins existing differentiated connectivity use cases such as video calling, streaming, and online payments, which smartphone users indicate they are willing to pay a premium for.

The latest global report from Ericsson ConsumerLab, titled Elevating 5G with Differentiated Connectivity, published today, November 13, focuses on differentiated connectivity and consumers’ willingness to pay communications service providers (CSPs) for guaranteed higher performance for essential apps.

Almost one in four generative AI users are already willing to pay up to 35 percent more for guaranteed fast and secure connectivity for these high-capacity applications. The research reveals that 35 percent of surveyed 5G smartphone users express interest in paying for differentiated connectivity for essential applications.

The CSP-focused report also explores revenue generation opportunities for service providers based on the survey findings. Jasmeet Sethi, Head of ConsumerLab at Ericsson, states: “The latest comprehensive research indicates that as AI-powered applications become more prevalent, users’ expectations for enhanced connectivity are rising. This reflects consumers' expectations for the future capabilities of AI apps—potentially related to image, audio, or video generation—and their willingness to pay for these capabilities to perform swiftly and with high quality. This signals an opportunity for CSPs globally to meet this demand through tailored connectivity experiences.”

Sethi adds that the potential for revenue generation through differentiated connectivity will increase as CSPs transition to performance-based business models, offering tailored subscriptions and plans with assured performance for different consumer segments. “This shift could drive a 5-12 percent uplift in 5G ARPU (Average Revenue Per User) as users seek guaranteed reliable performance for specific applications,” he explains. “Additionally, there is an opportunity to unlock new revenue streams from the significant demand among 5G users for high-performance apps, with one in three 5G smartphone users willing to reallocate 10 percent of their current mobile app spend to purchase apps with built-in elevated connectivity. By exposing Quality on Demand (QoD) network APIs (Application Programming Interfaces) to developers, CSPs can tap into this demand, enabling developers to offer premium, high-performance experiences and unlocking new revenue streams in the process.”

Key Research Takeaways

• Willingness to Pay: 35 percent of global 5G users are open to paying more for differentiated connectivity that guarantees better performance for essential tasks.
• Assurance Seekers Segment: Contrary to the belief that users will not pay extra for connectivity, the survey identified 20 percent of users, known as ‘Assurance Seekers’, actively seeking elevated connectivity for critical applications and willing to pay for it.
• Generative AI App Demand: The number of smartphone users using generative AI apps weekly is expected to rise 2.5-fold in the next five years. One in four current AI users are already willing to pay 35 percent more for differentiated connectivity to ensure fast and responsive performance of AI-driven applications.
• Regional Interest: Markets such as India, Thailand, and Saudi Arabia show double the share of smartphone users interested in differentiated connectivity compared to markets such as France and Spain.
• Five-Stage Journey for CSPs: The study outlines a pathway for CSPs from non-differentiated mobile broadband to performance-driven and platform-based models, where network APIs empower developers to create customised app experiences.

More than 23,000 smartphone users between the ages of 15 and 69 were surveyed online for this research, with over 17,000 of those being 5G smartphone users from 16 key markets globally. Ericsson researchers state that the survey is representative of 1.1 billion people, including 750 million 5G smartphone users. The surveyed 5G users came from Australia, Brazil, Canada, Mainland China, France, Hong Kong, India, Saudi Arabia, Singapore, South Korea, Spain, Taiwan, Thailand, the UAE, the United Kingdom, and the United States.